“We are now surrounded on all sides: upstream raw materials are increasing prices, downstream cars are lowering prices; internal workers’ wages are increasing, and foreign companies are facing fierce competition from international companies and even other domestic counterparts.†During the “two sessions,†the Wanxiang Group Board of Directors Chairman Lu Guanqiu confided to reporters his own distress. "We only have to improve our ability to adapt to changes and provide market needs, and constantly look for new outlets."
It is reported that not only Lu Guanqiu has been troubled by these problems. Since the momentum of automobile growth has weakened since the second half of 2004, many veterans of auto parts report that the market is not doing well now, and all kinds of unexpected difficulties have been tested on the resilience of companies at all times. The reporter found in the interview that the concerns of local companies and foreign-funded enterprises are completely different.
Local companies:
The lack of innovative Chinese spare parts will become foreign capital appendages
The troubles of local company executives include technology, management, and support. However, they generally believe that the bottleneck is the lack of innovation and independent development of domestic components.
In the interview, more than half of the CEOs mentioned the issue of self-development. Their general view is that the country has too few incentives for self-development, leading to a generally poor ability for independent development and innovation. In the case of automakers that are basically joint ventures, local parts and components companies are basically excluded from the vehicle's supporting system.
"I admit that there is still a gap in our technological level, but at least it should give us an opportunity for fair competition. Only in this way can we gradually reduce this gap. The current situation is that the Chinese government has given foreign companies a super-national treatment, and in turn they have discriminated against them. The local parts and components companies, which are forcing China's spare parts companies to become subordinates and vassals of foreign capital, said in an indignant voice from a local company boss who produces engine parts.
According to several local company executives, the current order of joint-venture vehicle companies to select matching suppliers is: joint venture foreign-owned domestic-funded enterprises -- joint venture foreign-funded domestic joint ventures --- European, American and Japanese companies --- China Local company.
“Now domestic models are mainly imported from abroad, and parts and components are all systems and channels for people. We simply cannot get in. The government proposes to develop parts and components for the automobile industry first, but if it is developed, nobody can use it. What?†Huang Laixing, chairman of Zhejiang Asia-Pacific Brake Systems Co., Ltd., has also been troubled by this issue.
Sun Zhongyi, chairman of Shandong Golden Kylin Group, said that the state has invested heavily in research and development of vehicles and light components. The investment in spare parts is much smaller than that of the entire vehicle. At the same time, the state has not substantially encouraged the vehicle manufacturers to use domestic products. This has led to the development of production capacity and the development of some spare parts that have independent intellectual property rights.
“The domestic parts and components companies generally lack the ability to innovate.†An executive believes that this is the main reason leading to the backwardness of independent development. However, he also stated that the ability to innovate is not enhanced by a few words. It must have relevant policies and financial support.
Foreign companies:
Localization faces costs and talent bottlenecks
It is totally different from the troubles of the local company executives. What caused the foreign capital executives to worry about is mainly the problems of cost, talent and localization.
“I am most concerned about whether the market development will be as good as expected.†said Zhang Yilin, sales manager of automotive business at Germany's Yina (China) Co., Ltd. “The market is hot and cold, and Chinese entrepreneurs have excess production capacity. The current output is also very unstable. It will rise by 200% for a while, and will drop 50% for a while. Our company's production capacity is based on maximum output, not batch The efficiency is very poor. In general, we may have higher costs than those in Europe where production is stable."
"In the current environment, competition is becoming more and more intense, and cars are constantly cutting prices, but the cost has not dropped so fast, but at the same time, the supply has not increased and the profit margins have decreased. At this time, foreign-funded enterprises must Accelerate the localization rate under the premise of guaranteeing quality, said Wang Yongqian, deputy general manager of Valeo Group's China headquarters.
However, he also said: “The localization of products is easy to say, and it is difficult to do so. We must involve product research and development, we must ensure quality, process, and increase equipment and molds. All of these require investment. With a small market share, companies It is impossible to make these investments."
Jiang Jian, deputy general manager of Delphi China, said that after setting up an R&D center in China last year, they faced the problem of talent training first. How to make talents meet the standards required by enterprises as quickly as possible is the biggest challenge Delphi currently faces.
“We are still considering how to achieve sustainable development in China and will increase investment. There will be some actions this year to increase capital and mergers and acquisitions,†said Jiang Jian.
Experts: Local Business Opportunities
In the low-level matching and aftermarket
“In the past, we have been saying that the vehicle must improve its own development capabilities. In fact, this is more important for the parts and components industry.†Fu Yuwu, executive vice chairman of the China Automotive Engineering Society, pointed out that the parts industry is not only scattered, chaotic, And worse, the competitiveness is too weak. So far, the problem of parts that lag behind the entire vehicle has not been truly resolved.
“There are tens of thousands of parts and components companies in China. Where are the opportunities? This issue is worth pondering. I think that the way out should be in these areas: First, start with the low-end suppliers, and gradually enter the third-level and second-level facilities. The second is to start from the aftermarket, gradually accumulate, and support the development of OEMs; third is to expand overseas markets and start from the aftermarket in foreign countries.
An expert who has studied the automobile for many years stated that parts and components companies must have a clear strategy. When they are in a low-end, weak position, they can't be eager for success and quick success. We must start from the basics step by step, earnestly accumulate experience and improve our own level.
He said that in the vehicle sector, almost all foreign companies have entered, and the competition in the spare parts sector has just begun and there are many opportunities. "The market will never be a latecomer. Only if it is done well. There will be opportunities for truly quality-assured products."
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